When it comes to the sale of luxury fashion on the internet, most people probably think first of bargain hunting on the remnants ramp and the sounding promise of high discounts. Those who can afford it, it seems, prefer to buy in shops where, unlike on the internet, the promise of quality and luxury can be felt directly. So how can luxury brands sell their products online without undermining their exclusive image?
Is the internet only suitable as a mass market for low-margin products in the fashion segment? A question that WiSo Professor Wolfgang Ketter, Professor of Information Systems at the University of Cologne and his, colleagues May Truong, Alok Gupta, and Eric van Heck would certainly answer in the negative. In a recent article in the prestigious Harvard Business Review, they develop a new perspective for the ailing online luxury fashion market.
In their article entitled "What Luxury Fashion Can Learn from the Wholesale Flower Market" the authors examine the challenges of online the luxury fashion industry in the light of the mechanisms of the world’s largest flower auction, Royal FloraHolland.
Wolfgang Ketter, May Truong, Alok Gupta and Eric van Heck suggest that adopting the Dutch auction model used in the flower market could provide a solution for high-end fashion brands.
The research team proposes that the use of Dutch auctions – a reverse auction method where prices start high and decrease – could revolutionise online fashion sales. This system has proven highly effective in the flower trade and could similarly address inventory issues for luxury fashion items.
Another key concept discussed is the use of a "presale phase", where buyers can purchase items at a fixed price before the auction. This strategy not only allows sellers to signal the value of their products but also encourages higher bids during the auction. The authors argue that such innovative pricing models could help luxury platforms reduce their losses while preserving brand exclusivity.
The article is based on years of research into Dutch flower auctions, which Ketter and his co-authors have published in leading academic journals, including Management Science and Information Systems Research.
